We have a number of Treasury Notes that are currently worth substantially more than the face value. For example, one that earns 5+ percent and matures in 2004 is quoted as being worth more than 8% more than face value. These are in an IRA so capital gains is not an issue. Especially if these get to 10% more (and with continued lowering of the Fed Funds rate, they might), I sort of feel I should do something, but these are supposed to be safe money. It is hard to get Treasury notes anymore, but, if I get one at say 2%, I would still draw even by keeping the 5 yr note in a couple of years. Of course it is likely that interest rates will be rising by that time, if not before. A part of me says I should sit tight, but another part of me says there should be something smart I could do. Then again I don't want to outsmart myself. Any suggestions?

I'm not sure what you mean by the "draw even" bit. Note that your bond has repriced itself so that the effective yield to maturity should exactly equal the yield of a "new" bond with the same maturity. Thus it does you little good (and perhaps some harm, in commissions and spreads) if you sell your current bond only to buy one which is similar. You might consider choosing a bond with a different maturity, but I can't recommend longer terms, and there isn't much left on the short end, 2004 being so close at hand. Moving the funds into stocks or some other asset class might make sense, but you'll have to see how it fits in your overall portfolio.

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